Consider Term Life Insurance In A Universal Life Wrapper!

In response to a combination of regulatory reserving requirements and competitive pressure to keep level term life insurance rates low, many of the most competitive term carriers (Transamerica and Genworth Life) are beginning to introduce hybrid products commonly referred to as “term-ul” products. 1stQuote.com expects every term carrier to join in this trend, and we believe the inherent flexibility of these Term/UL policies make them a BEST BUY!

These products are technically universal life insurance products. But for all intents and purposes, they perform almost identically to their traditional level term counterparts. They have guaranteed level premiums (comparable to term) for specified periods, with the same choices as term (10-15-20-30 years) as well as guaranteed level death benefits for those same periods, again, just like level term

What’s the difference to the consumer?

In essence, it’s more form over substance. But there is an advantage to these products in terms of flexibility. Because they are in Universal Life chassis, they include elements of flexibility that are not available on term contracts. This flexibility allows for changes in death benefit, and premiums, which, if needed, can come in handy down the road. For example, traditional level term policies have no contractual provision to allow for reductions in face amount. If you don’t need all of the coverage you have, your only choice may be to drop the policy altogether and buy a new one, which may either be cost prohibitive (if your health has changed), or unavailable altogether.

On the other hand, these new term-ul plans contractually allow for the flexibility to make changes in your death benefit. They also include the flexibility to alter your premiums in a manner that could make the policy last longer than the initial desired period of coverage. For instance, a policy owner who initially purchases a term-ul with a premium level guaranteed to last 20 years, could, down the road, make certain changes to the premium and, by doing so, cause the policy to last longer than 20 years. The only options on a traditional term contract are to keep it in force, or possibly convert it to an ordinary universal life or whole life policy, assuming the policy has a convertibility feature and that feature has not yet expired.

All in all, for most buyers, the term-ul products have been, and will continue to be, compared and used interchangeably with their level term counterparts. This is the industry’s latest creative move in response to an ever changing regulatory environment. That being said, in this case, the consumer is winning in that the new products seem to be incrementally less expensive, yet they deliver the same level guaranteed periods of coverage along with some additional and potentially valuable flexibility. To find out more, get an instant Term Life Insurance Quote at 1stQuote.com.